“Intel’s guidance ranges from a 2% decline to 7% growth, averaging 3% growth. Samsung expects 2014 semiconductor capital spending to be similar to 2013. TSMC’s guidance ranges from a 2% decline to 3% growth, averaging 1% growth. The average expected growth spending by the three companies is 1%.”

Gartner’s April forecast was 5.5% growth. Gartner forecast semiconductor capital equipment spending would grow 12.2% in 2014, about twice the rate of overall capital spending but about half the growth expected by SEMI.

The explanation for the mismatch with companies’ forecasts is, said Jewell, that the companies will increase capex as the year unfolds.

There is little chance of an over-spend if you take the ratio of capex to semiconductor market.

“The ratio was 20% in the overcapacity years of 2001 to 2002,” says Jewell, “the ratio dropped below 10% in 2005. Since 2007 the ratio has been in a steady range of 11% to 13%. The ratio in 2014 and 2015 is based on the SEMI equipment forecast (23% growth in 2014 and 2% in 2015) and the WSTS semiconductor market forecast (4.1% in 2014 and 3.4% in 2015). Under these assumptions, the industry will not experience overcapacity in the next few years.”

Assuming 10% growth for semiconductor sales in both 2014 and 2015 and no change in equipment spending in 2014 and 2015, the four-year-average ratio would drop to 10% in 2015, implying under-capacity.

“However we do not believe this will occur,” says Jewell, “we expect companies to increase their equipment purchases in response to solid market growth.”

2 Comments

SEMI’s capex forcecast is was 8% (in February 2014) for semiconductor companies (not including fabless and back end). The 23% relates to equipment spending (new, used and in-house) and this number was from February 2014..

There is a mistake: SEMI’s capex forcecast is not 24% it was 8% (in February 2014) for semiconductor companies (not including fabless and back end). The 24% relates to equipment spending (new, used and in-house) and this number was from February 2014..